Complete Guide to Hiring Employees in Laos

Laos is one of the most affordable countries in Southeast Asia regarding hiring and living expenses compared to its neighbors like China, Vietnam, Cambodia, and Vietnam. Officially known as the Lao People’s Democratic Republic, the landlocked country has emerged as a significant destination for acquiring talent for obvious reasons. 

Previously, Laos’s primary income source was agriculture, tourism, and mining. However, after the fourth industrial revolution, the abundance of education has increased, accompanying a rising digital expansion. It has provided the youth of Laos with the necessary tools to sharpen their skills as talented professionals in various fields. 

The country offers a rich talent base and affordable monthly salaries with employee-oriented labor laws. Employers that hire employees in Laos must comply with the country’s labor laws. Learn how to recruit employees in Laos here.   

Things to Know Before Hiring in Laos

Hiring in any foreign country is regulated by its labor laws. While there is an amendment for every situation, here are some must-know rules for employers looking to hire employees in Laos.

Laos labor laws

• All employees in Laos working for a domestic or an internationally registered company are entitled to minimum pay of LAK 1,200,000 per month. As of 1st May 2023, the minimum wage will be increased to LAK 1,300,000 per month.  
• The basic salary is only applicable for an employee working 26 days a month, 8 hours daily, and six days a week, irrespective of the type of employment. 
• The employer is expected to provide overtime pay to the employees working more than 8 hours daily. Generally, overtime must now exceed three hours per day or 45 hours per month.

A breakdown of the overtime pay has been provided below

– There are no such rules governing bonuses for employees in Laos. 

Vacation and maternity leave in Laos

• An employee is entitled to at least 15 days of paid leave if they have a fixed or indefinite contract or more than a year. As per Article 57 Labor Law, the employee must also complete a year of service with the company to enjoy the paid annual leave. 
• Every female employee is entitled to a maternity leave of 105 days. It includes a 45-day paid leave after delivery.  

Severance laws

• Breach of any company law determined by a contract can result in termination. 
• A fixed-term contract can be terminated at any time by an employer or by the employee through mutual understating. However, an employee must serve a notice period of 45 days in case of specialized skills and 30 days in case of manual work.  

Taxation in Laos

The below table shows a complete breakdown of income tax slabs and charges 

The Cost of Hiring an Employee in Laos

A substantial financial upside has always accompanied hiring talents from a developing country, and Laos is no expectation. While the Laotians have heavily relied on farming and tourism, the country has shown a promising future in providing talented professionals after the digital revolution. Furthermore, the Laotian government has enforced favorable labor laws to add fuel to the fire. 

Company registration: 

To commence the recruitment and selection in Laos, an employer must register their business in the country.
Employers are required to visit the Department of Enterprise Registration and Management to register their company. The cost of registration varies as per the type of business. However, in any case, the cost of registering a company in Laos is nearly negligible compared to other countries.  

Average salary: 

Laos is considered one of the most affordable countries in Southeast Asia, with an average yearly wage of USD 2,150. The mentioned yearly remuneration boils down to a monthly average of USD 179. 

Severance pay: 

An employee under a full-time or part-time contract is entitled to severance pay. The severance pay is determined by multiplying the month an employee has served with 10% of their last month’s remuneration (Article 90, Labour Law).

Termination: 

A termination without any valid or sufficient reason requires an employer to pay 15% of an employee’s last month’s remuneration multiplied by the number of months served by that employee (Articles 88 and 90, Labour Law). However, in case of a justified termination, the employee is entitled to severance pay at 10% (Article 90, Labour Law). 

Advertising and outsourcing: 

When recruitment and selection in Laos are initiated, the employer must consider the cost of advertising. Many employers tend to rely on staffing agencies to decrease the turnaround time for the hiring process in Laos. The cost of hiring a recruitment agency might vary per the service and the number of required candidates. 

While one should consider the cost of advertising in all cases, employers willing to seek the aid of an outsourced recruitment agency must also consider the cost of hiring them. 

What Does a Company Need to Hire Employees in Laos

Any company can hire employees in Laos once they fulfill the criteria mentioned. 

• A company must be a local legal entity in the Lao People’s Democratic Republic. 
• The company must meet the minimum requirements for taxation and any other conditions determined by the Laotian government. 
• Develop processes to develop payroll and benefits offered to employees.
• Minimum safety measures in place, as per the labor law.

Various options for Hiring Employees in Laos

Hiring as an employee

Hiring as an employer in Laos is the traditional route every company takes. An employer needs to register a company in Laos or open a subsidiary before hiring employees in Laos. The best route is to work with a local government official to meet the mentioned prerequisites. After a company is legally registered in Laos, an employer can then hire employees in Laos.

Global EOR services

Recruitment and selection in Laos for independent contractors is much simpler when compared to its traditional counterpart. Hiring a contractor through a global EOR solution provides more flexibility for the employer while allowing them to transfer some of the responsibilities of a registered employer. The turnaround time for onboarding also decreases by a vast extent, allowing an employer to hire immediately under any circumstances.

The Steps to Hiring in Laos

The steps to hire employees in Laos are given below

Advertising open positions

• Once the company is ready to hire employees in Laos, start advertising for open positions. 
• Based on the type of position, an employer can advertise online or rely on other marketing channels to promote its requirements. 

Conducting interviews

• The traditional one-on-one interview is a must for any form of hiring, offline or online. Offline interviews are often considered necessary, but online hiring and remote work have gained tremendous momentum with excellent connectivity and streamlined processes within a company. 
• Once the names of shortlisted candidates for the advertised position have been acquired, an employer can proceed with the final selection. 

Negotiation and employment contract

• Finalizing a candidate requires more than an internal discussion. While hiring, you need to discuss the working hours, mode of work, and so on with the selected candidate. After a mutual agreement, the employer can then draft an employment contract. 
• The employment contract serves as the highlight of the agreed terms. However, one must always ensure that the Laotian rules are also considered in the employment contract to conclude the hiring process in Laos. 
• A mandatory reference check is always required during recruitment and selection in Laos or any other foreign country. There are no such rules that an employer needs to abide by while conducting a background check. 

Let Multiplier be Your EOR Platform in Laos

Laos is a talent-rich country. To hire in the country, one must register their company and follow through several complicated processes to hire, onboard, and manage these employees. 

Many companies choose to lose time manually traversing through the whole process; they tend to lose the essence of urgency. One of the best practices that have enabled companies to be quick and decisive is to rely on an EOR solution. Any company can transfer the hassles of complying with the local laws to Multiplier. 

Multiplier is a SaaS-based EOR platform that bridges the gap of registering a company in Laos. Unlike a traditional process, an employer is not required to register a company or open a new subsidiary to hire employees in Laos. Furthermore, any brand can test new hiring markets and talents while negating the complex prerequisites of hiring in a foreign land with Multiplier.